bitcoin The mining industry is entering a difficult period marked by increasing competition, rising energy demands and lower profits, according to Fred Thiel, CEO of MARA Holdings (MARA).
“Bitcoin mining is a zero-sum game,” Thiel said in an interview with CoinDesk. “As more people add capacity, it becomes harder for everyone else. Margins are compressed and the floor is energy cost.”
Thiel painted the picture of a mature and more brutal industry, where only miners with access to reliable, low-cost energy, or new business models, will survive. Increasingly, he said, many mining companies are pivoting into adjacent fields, such as artificial intelligence or building high-performance computing (HPC) infrastructure. Others are simply being overtaken by players implementing their own hardware at a lower cost, including major manufacturers and companies like Tether.
“There are hardware vendors that run their own mining operations because customers don’t buy as much equipment,” Thiel said. “The global hashrate continues to grow, which means everyone else’s margins continue to shrink.”
Difficult road ahead
Thiel warned that the outlook for miners could become even more dire after the next bitcoin halving in 2028, when block rewards will be halved again, this time to just over 1.5 BTC. Unless transaction fees or the price of bitcoin increase, the economics of mining will become unsustainable for many.
“Bitcoin was designed with the idea that transaction fees would eventually replace subsidy,” Thiel said. “But that hasn’t happened. If bitcoin doesn’t grow at 50% or more annually, the math becomes very difficult after 2028, and even more difficult in 2032.”
Despite several short-lived spikes, transaction fees on the bitcoin network remain relatively low. Most recent rate increases, such as those caused by Ordinals and enrollments, have not been sustained long enough to replace block subsidies. Thiel said miners are keeping an eye on new trends, such as banks pre-purchasing block space to ensure settlement priority, that could change the dynamic, but nothing concrete has emerged.
In this environment, smaller miners face great pressure. Larger players are adapting by controlling energy sources and investing in private infrastructure for AI, while more efficient operators may be forced to close.
“Our strategy is to be in the lowest quartile in terms of production costs,” Thiel said. “Because in a tight market, 75% of others have to close before us.”
Looking ahead, Thiel expects the market to self-regulate as miners reach limits of profitability. But the threshold is rising rapidly. “By 2028, you will be a power generator, owned by one or associated with one,” he said.
“The days of being a grid-connected miner are numbered.”
